Asked by Jaquize Cross on Apr 24, 2024
An investor purchased an 8 ½% bond at 108. The bond matures in 5 years. Calculate the current yield. (Round answer to two decimal places.)
Current Yield
The annual income (interest or dividends) divided by the current price of the security.
Bonds
Debt securities issued by entities such as corporations or governments to raise funds, with the promise to repay the principal along with interest at a future date.
Maturation
The process of reaching full development or the final stage of development, often used in contexts such as biology, chemistry, or finance.
- Learn how to calculate the current yield for bonds.
- Use mathematical expertise in finance to ascertain bond yields.
- Assess the connection between the valuation of bonds, interest percentages, and maturity timelines.
Learning Objectives
- Learn how to calculate the current yield for bonds.
- Use mathematical expertise in finance to ascertain bond yields.
- Assess the connection between the valuation of bonds, interest percentages, and maturity timelines.